Blockchain technology has undoubtedly transformed almost every sector you can think of. Whether it’s the gaming industry, the art industry, the finance industry, or the banking industry, blockchain technology has evolved the way we perceive each industry through its technology. The number of opportunities enabled by blockchain has led us to see the future of each industry very differently. Blockchain technology has both the capability and hype to stay here for the long term.
Ever since the advent of blockchain technology, blockchains have transformed into a variety of types depending on their specifications, build, protocol, and configuration. But before we get into the different two types that have been introduced in recent years, let’s take a quick refresher on what blockchain technology is.
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What are blockchains?
Blockchains might seem complicated for beginners, and they definitely can be complex; however, their core concept is straightforward.
A blockchain is a database that collects information together in groups in the form of blocks that hold records, data, or information. Blocks have limited storage capacities and, when filled, are chained onto the previously filled block, forming a chain of blocks known as the “blockchain.”
All incoming and new information that follows after the filled block is added to a new block, compiled, and added to the chain once filled. What’s unique about blockchains as databases and their method of storing data is that they create an irreversible timeline of data. When a block is filled, it’s set in stone, becomes immutable, and becomes a part of a timeline. Each block within the blockchain is given an exact timestamp of when it was added to the chain, making it practically impossible to change or alter data in the previous blocks.
Nowadays, blockchain serves as the underlying technology of cryptocurrencies. They serve as a distributed ledger of transactions that is distributed across a network of computer systems. Each block within a blockchain contains several transactions, and every time a transaction occurs, they’re added to blocks with an immutable cryptographic signature.
What’s special about blockchain is its ability to enable a decentralized ecosystem with its immutability, security, and transparency. The immutable nature of blockchain practically makes the technology unhackable, while the distributed nature of the blockchain makes it both transparent and private at the time.
Now, blockchain technology powers numerous sectors, industries, projects, and products. And with the ever-growing success of this technology, we’re witnessing it evolve into various types. Currently, the most common types are public and private blockchains.
Public blockchains are the most common type of blockchain there is. A public blockchain, as the name suggests, is a blockchain that is open to the public. They’re also known as ‘permissionless blockchains’, because you don’t need to pull strings or get permission to use and access the blockchain. Everyone on the network can read, write, and participate in the blockchain network, making them decentralized.
Public blockchains operate on an incentivizing scheme that invites new participants to join and keep the network safe. For example, Bitcoin, one of the largest public blockchains, incentivizes its users with digital tokens to keep the network protocol running.
Another example can be taken from Ethereum, easily one of the largest and most intuitive public blockchains in the market today. While they also incentivize new participants with digital tokens, they also allow users to publish improvement proposals and share what they think would be best for the network. Most of the time, these proposals are reviewed, voted for, and accepted by the network. Other popular examples would include Dogecoin, Shiba Inu and Solana.
Each public blockchain platform is designed to operate with maximum security; they’re open for everyone and enable people to make transactions efficiently without the need to verify their identity and compromise their security. Public blockchains are truly decentralized and completely transparent.
However, they do have their drawbacks. The primary drawback of public blockchains is their high power consumption that is necessary to maintain the network. Other issues include their high dependency on genuine contributors. At times, network participants may include malicious users who may be involved in fraudulent activities.
However, the public blockchain community is abundant with eager users who are actively trying to solve these problems.
Unlike public blockchains, private blockchains are permissioned blockchains. As the name suggests, they’re not open to the public and need specific permission from the governing body of blockchain.
Private blockchains allow different levels of access that distinguish which users can write, read, and audit the blockchain. Private blockchains are not decentralized because they’re owned and operated by a centralized body. The centralized body has the right to override, edit, or delete any entry on the blockchain as required.
For example, Hyper Ledger provides customized blockchain technology services that emphasize trust and accountability amongst all participants in the network. The platform facilitates permissioned transactions that need users on the network to have the necessary permissions and verifications to participate.
Private blockchains are often used for developing internal networking within a limited pool of users, which is why they’re able to offer faster speeds and higher efficiency than their public counterparts.
For example, Quorum, an Ethereum private-blockchain-based open-source network specifically built for large enterprises, enables fast transactions on their private blockchain. Moreover, private blockchains are completely private because network sharing on private blockchains often requires an increased level of privacy for data confidentiality reasons.
Other features include their compliance, speed, scalability, and reliability in contrast to public blockchains. However, they tend to fall back when it comes to being truly decentralized, which is why they aren’t used as much.
Public vs private blockchains: Which is better?
Now that we know what private and public blockchains are, we can now determine which one is better.
Frankly speaking, the use cases for both blockchains are entirely different. Each blockchain has its own set of features, benefits, and drawbacks. The better blockchain all comes to your preference, application, and purpose.
If you’re looking for a completely decentralized, transparent, and immutable system as well as want to work with larger communities, then public blockchains should be your go-to option.
If you’re looking for cost-efficiency, speed, security, confidentiality, and compliance, then you might prefer a private blockchain.
Public and private blockchain technologies are constantly improving and working on their flaws. As a result, selecting the better option, or even developing your own blockchain-based platform, might be tricky, and it might all come down to what you need.